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With the cost of cotton increasingly going up, how do you see the demand for synthetic fibre going up globally and in India?
Cotton pricing is coming down, at least for the time being. This is because China continues to release its strategic stocks and as inventories rise in general due to relatively weak textile markets within China. This is having a short term negative impact on polyester staple demand and growth rates are being cut back. This is in conjunction with further penetration of recycled staple. So, virgin staple is having a difficult period, at least within China. But the quality of some of the Chinese cotton is less than favourable. So, it is not quite a swing away from polyester staple as some feared.
Globally, cotton production is running at around 26 million tonnes. But consumption in the mills is at just below 25 million tonnes as estimated by PCI. So with this apparent stock-build, it will be difficult to see cotton pricing rise in the short term.
Polyester is however still cheaper than cotton and indeed remains the most cost competitive fibre within the textile mix. In the longer term, cotton supply is not expected to keep pace with total demand growth in textiles. So this important natural fibre will again lose market share to polyester staple and filament. This may probably be from 2017 onwards.
How does the Polyester Textile Investment Promotion Cell in India created in partnership with Wazir Advisors work?
The principle objective and key tasks we intend to carry out together include the following:
Of all the manmade fibres, which are the ones that you expect to grow the most and why?
Polyester is the only manmade fibre with serious growth prospect, apart from polypropylene which has a good growth prospect in both nonwovens and geo-textiles. However, polyester is cheaper and dominates pretty much all the segments, emerging as the most versatile and abundant raw material for the textile chain. China's heavy dependence on polyester proves the same. Nylon 6 and 66 are fundamentally niche products. Acrylics are costly and under constant attack from polyester. Viscose fibres are vulnerable against cotton in terms of cheaper pricing. This is summarised in the following chart:
To the question - why polyester, refer to the below chart:
What conditions and systems need to be put in place in terms of industry structure and capability to truly accelerate the throughput of polyester products into the mid stream and downstream sector?
There are many conditions which need to be put in place to improve India's chances in the polyester sector. An overall weakness is seen in the midstream textile weaving and knitting sectors. The quality of textiles finishing also needs attention even though there are some very skilled companies in operation. We sense that overall costs are well down in India compared to many other key Asian countries. This is increasingly the case specially with respect to China and South East Asia, where energy and labour costs have been rising at a fast rate in the last two years.
Our overriding conclusion is that India as a manmade industry should be more confident. Textile and apparel producers should recognise the massive trade opportunities which come their way because China is increasingly concentrating on meeting the domestic demand and in doing so upgrading and adapting its domestic textile systems for local use. In reality, India should be able to coordinate its manmade textile sector far better. Its industry should seek guidance from the current strategies of its Asian neighbours like Taiwan, Korea and China. Once leading brand owners have studied the pace of change within India, they will finally sense that India can meet the textile quality and compliance standards and more importantly the volumes required to meet both domestic and export demand.
*Providing a constant stream of innovation - value-added products in select industries - selecting niche segments
*Recognise that ultimately scale matters for commodity output matching China
*Promote a philosophy for continued upgrade of latest weaving dyeing and finishing technologies
*Major FDI based integrated set-ups could be increasingly relevant including fibre-spinning-weaving, dyeing and finishing
*Setting and achieving the performance targets using a mix of private and institutional support for R&D and global marketing
*Heavy emphasis on fibre, textile and apparel co-branding
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